Why do some people end up earning so much more than others?
According to research, workers with higher education levels and more professional experience have higher salaries.
But there’s more to it than that. Two workers with an identical education background, the same experience, gender, and even IQ levels, are still likely to earn substantially different wages. That’s because personality plays a key role as well, with a growing body of research as proof that your personality is connected to productivity and possible unexplained wage differences.
We often hear about the power of personality, and how some traits are beneficial for our careers. For example, being hard-working, driven, reliable, and organized is usually associated with better job performance while being more agreeable doesn’t usually pay off. Even Amazon CEO billionaire, Jeff Bezos, agrees that the most successful people aren’t necessarily the ones who are the quickest thinkers or the most well-read. They’re the ones who focus on delivering the best results and making the tough calls that turn out to be right in the end.
When you’re looking for a job that is a good fit for you, it’s important to think not only about whether your skills match the job requirements, but whether you have a strong character that makes you suited for the role. If you don’t take the latter into consideration, it could affect your paycheck.
However, it is less clear when these personality traits matter most and who benefits from them.
A new study by Miriam Gensowski, at the University of Copenhagen, sheds light on these questions.
From 1921 to 1922, Gensowski – assistant professor at the Department of Economics of the University of Copenhagen – revisited a data set from all schools in California, grades one through eight, based on the students who scored in the top 0.5% of the IQ distribution. The students were rated on their personality traits and behavior. The main five personality traits found were: openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism.
One striking result is how much the trait of conscientiousness matters. Men who are more conscientious than average earn an extra $567,000 over their lifetimes or 16.7% of the average lifetime earnings.
For women, the magnitude of these effects is smaller (for one thing, women earned less because of restricted opportunities). Furthermore, extroversion is more strongly correlated with higher earnings than conscientiousness is, unlike for men.
It may surprise you to learn that more “agreeable” men earn significantly less. Being one standard deviation higher on agreeableness reduces lifetime earnings by about 8%, or $267,600. In this context, agreeableness means a person is less antagonistic and more likely to consider the interests of others. You might have thought it would be correlated with higher earnings, but it’s not.
Higher IQ is also linked to higher earnings, by about 5% or $184,100 for a one standard deviation boost. Apparently, being “even smarter yet,” at least as measured by IQ, means you’ll get additional pay.
Another interesting result from the data is that IQ and conscientiousness are not very well correlated. This means that finding the ideal worker isn’t easy. The quality of openness, however, is positively in a good relationship with IQ, since smarter workers are more willing to experiment and try new things.
What’s more peculiar is that, if we look at the data of very young workers, we could erroneously conclude that personality traits do not matter when it comes to income. Instead, the results indicate that the main advantages of strong personality traits arise to advanced-level workers.
You can imagine why – for example, consider how a manager’s personality would have a stronger impact on the productivity of his team than that of an entry-level employee. The intensity and length of your working life – both of which tend to be influenced by personality— may impact your earnings. Meaning that the older you are, and the more experience you have, the more money you’ll earn.
This research provides valuable insight into the possible channels through which personality traits can influence our careers. Conscientiousness and extraversion not only affect on-the-job productivity, but they can also increase lifetime earnings indirectly by influencing behavior, as well as the length and intensity of our working lives. Age-by-age analysis over the lifetime shows that even if earnings discrepancies between young workers today are small, we should expect them to grow significantly as they advance in their careers.
Why is it important to know what makes certain personalities inclined to earn more than others? As many of us have come to know from personal experiences, personality has become increasingly important in personnel recruitment. Employers in both the U.S. and the U.K. often cite personality and attitude as two of the most important factors in hiring.
Keep this in mind – you never know when it might come in handy.
